COVID-19: Navigating the legal measures

In light of the legal challenges businesses may face due to COVID-19 related events, we want to highlight the legal measures that are currently put in place by Singapore’s Government under the COVID-19 (Temporary Measures) Act.

In an op-ed published in the Straits Times on May 7, VK Rajah (former Supreme Court judge and Attorney-General of Singapore) and Professor Goh Yihan (Dean, School of Law, Singapore Management University) argued that global business centres like Singapore will have to prepare for what they call a “legal tsunami” of disputes following COVID-19.

We have previously summarised relevant support measures provided through three budgets launched between 18 Feb and 6 April. The support provided through these budgets amounts to 12 % of Singapore’s GDP. As a complement to the financial measures, the Government has also introduced temporary legal measures to meet the challenges of the situation.

COVID-19 (Temporary Measures) Act

The Singaporean Parliament passed the COVID-19 (Temporary Measures) Act on 7 April 2020. The Act commenced on 20 April. It is meant to provide relief for the businesses that are unable to fulfil their contractual obligations due to COVID-19 related events.

Minister for Law, K. Shanmugam calls the Act a “legal circuit breaker”. For a temporary period, the Act will prevent contracting parties from taking certain legal actions, if certain types of contracts are breached. Importantly, the inability to fulfil the contract must be caused by COVID-19 related circumstances.

The Minister for Law has explained the Act and the reasonings behind it. His speech to Parliament can be read here. However, NBAS has summarised some important aspects that Norwegian businesses should be aware of.

Timeframe

The Act covers contracts entered into before 25 March 2020, with obligations to be performed on or after 1 February 2020. The Act will initially be in place for 6 months, but may be extended.

What do you need to do?

In order to obtain the relief, those who are unable to perform their contracts must inform the other parties to the contract. Information of how to proceed can be found here.

Relief provided for financially distressed businesses

The Act also creates a temporary change to bankruptcy and insolvency laws. For companies the threshold for insolvency is increased from $10 000 to $100 000. As such, a company cannot be made bankrupt unless they owe a minimum of $100 000.